Pessimism for a poor choice to lead Treasury

February 6, 2013 - Mike Maneval

Lest any reformists feel too optimistic in the wake of news that the U.S. Justice Department is pursing civil action against Standard & Poor's, saying the firm, as the Associated Press reported Wednesday, "knowingly inflated its ratings on risky mortgage investments," or news of hefty fines against Britain's Royal Bank of Scotland for manipulating a key interest rate, they should consider our probable next Secretary of the Treasury.

The promotion of Jack Lew, White House Chief of Staff, to head the Treasury Department, has drawn consternation from conservative writers and pundits, with Jeffrey Anderson of the Weekly Standard reporting Republican charges he was a point man on the federal government ignoring and evading legal requirements for funding Medicare, and the political organization FreedomWorks released a missive of 10 reasons Lew shouldn't run Treasury, citing his "ties to corporate welfare." Time magazine's political blog Swampland reports that Republican U.S. Sen. Jeff Sessions of Alabama has stated, "Lew must never be secretary of the Treasury."

But conservatives are far from alone on skepticism over the choice of Lew. The Nation's Robert Scheer argues Lew's time as an official in the Clinton administration leaves his fingerprints all over stripping oversight and accountability from portions of the mortgage market, leading in part to the financial collapse and subsequent recession. The same magazine's John Nichols proposes tough questions on Lew's past positions on regulation of the financial sector and on paycheck-depressing trade policies and notes the Senate's biggest critic of the banking and finance industries, independent U.S. Sen. Bernie Sanders of Vermont, already had said he'll vote against Lew. A writer for the progressive online forum Daily Kos called the beneficiary of Lew's time in the private sector, "the financial equivalent of the Titanic, the Lusitania, and the Hindenburg, all folded into one exquisitely mismanaged holding company."

In the past I've directed ire at Lew for his connections, through a $1 million-a-year salary job at CitiBank before the bank was bailed out of ruin by tax dollars, to overcompensated recklessness on Wall Street, when he was first selected by President Barack Obama to serve as budget director. And since then and before, as Lew rotated into the Chief of Staff position, I've written about figures on the economic scene who are more worthy of consideration for his new likely post, and who, were they to be selected, could inspire greater optimism that authorities were learning from past errors, such as New York state Attorney General Eric Schneiderman, former Commodity Futures Trading Commission executive Brooksley Born, and former chairwoman Sheila Bair of the Federal Deposit Insurance Corp. Other figures who would make better secretaries include economists Joseph Stiglitz and Nouriel Roubini.

The American taxpayer and consumer deserves a Treasury chief that can inspire optimism that measures to steer the course of the U.S. economy economy away from recession and stagnation, toward the prudent and accountable decision-making that produces growth. Conservative and liberal critics of Lew are right that Lew falls short.